MINUTES OF THE METRO COUNCIL

COMMUNITY PLANNING COMMITTEE REGULAR MEETING

Wednesday, November 7, 2002

Metro Council Chamber

Members Present:  Rod Park (Chair), Bill Atherton, David Bragdon, Rex Burkholder, Carl Hosticka, Susan McLain, and Rod Monroe

Members Absent:  None.

1.  CALL TO ORDER AND ROLL CALL. Chair Park called the meeting to order at 12:15 p.m.

2.  CONTINUATION OF AGENDA ITEMS FROM NOVEMBER 5, 2002 (agenda items are as listed on the November 5, 2002, agenda packet)

2.  CONSIDERATION OF THE MINUTES of the Community Planning Committee meetings of October 22, 29 and 30, 2002 (distributed and made a part of this record).

8.  JOBS POLICY

•  UGMFP Title 4 – Industrial & Other Employment Areas and Map of Regional Significance. Chair Park, continuing from the November 5, 2002, agenda, spoke regarding the postponement of the Title 4 lands issue, and additional language and mapping in the exhibit for that (Exhibits F and E to Ordinance No. 02-969).

Mr. Michael Morrissey explained the remaining documents produced for the committee for discussion at this meeting relating to Ordinance No. 02-969, starting with Exhibit F (lavender), Changes to Functional Plan Title 4: Industrial and Other Employment Areas, saying this document was the Metro Policy Advisory Committee’s (MPAC) recommendation and included the new language from Dick Benner, Senior Assistant Counsel, and two maps that were a part of Exhibit E; also distributed was a blue document, Attachment Item 4, 2002-2022 – Urban Growth Report, An Employment Land Analysis, and a green sheet of the flagged items from the Residential UGR (Appendix Item #3, Residential UGR, Flagged Items). The tan document, Mr. Morrissey continued, was the most recent forecast memo (of October 22, 2002) from Dennis Yee, Metro Chief Economist, and the ledger-sized yellow spreadsheet, Community Planning Worksheet for UGB Expansion, showed the recommendations made by the Executive Officer, MPAC and councilors. (All of the above documents are included as a part of this record.)

Chair Park asked Mr. Morrissey to explain the purple sheets and mapping. Mr. Morrissey said they had produced information for each of the items to be discussed. He started with Exhibit F (lavender paper), which was the MPAC version of Title 4, which also included Mr. Benner’s language. There were also two maps that were part of Exhibit E. The blue item related to the Urban Growth Report (UGR), and the green sheet was the flagged items from the residential UGR, the brown sheets were the most recent forecast from Mr. Yee, and the yellow spreadsheet was the Urban Growth Boundary (UGB) site areas by clusters and it showed recommendations made by the Executive, MPAC, and the councilors.

Chair Park said that the purple document related to Exhibit F and the two maps were Exhibit E. One of the maps depicted the areas within the current boundary that, if the map were accepted, would be Regionally Significant Industrial Areas. The other map was a concept map related to the areas under Title 11. He asked Councilor Burkholder to discuss the changes in language.

Speaking to his motion, Councilor Burkholder that the language changes drafted at his request by Dan Cooper, General Counsel, accounted for two things: (1) the location of existing uses that didn’t conform to limitations that were in subsections C, D and E (3.07.420, p. 2 of the document), in the areas that were designated in Exhibit E, as Regionally Significant Industrial Areas, and (2) the need to recognize that the individual cities and counties achieve a mix of type of employment uses. His concern had been how to you keep all that together and make it so that there was a coherent regional strategy towards industrial areas, and not have individual jurisdictions changing that designation independently. He said he thought this was addressed in subsection J (3.07.420, p. 3), where it stated, “By December 31, 2003, Metro shall, following consultations with cities and counties, adopt a map of Regionally Significant Industrial Areas with specific boundaries derived from the generalized map of Regionally Significant Industrial Areas adopted in Ordinance No. 02-969,” which was Exhibit E. Councilor Burkholder said he believed the language making Metro responsible for designating those areas after consultation with those cities and counties addressed his concerns. This was why he had requested that the measure be postponed, he added, and said he had no other concerns with this exhibit.

Councilor McLain thanked the staff, Andy Cotugno, Planning Director, Dan Cooper, and Dick Benner, for taking the time to go through the measure and write this language, as it was easier to read and understand. She commended MPAC and the Metro Technical Advisory Committee (MTAC) for their work on this as well. Councilor McLain said she thought there was more that Metro could do, that there were some issues that hadn’t been addressed in this work, but that this was a good place to start. Regarding the two maps that formed Exhibit E, she said it was important to ask if the areas designated actually wanted to be regionally significant since she didn’t want Metro to put those types of restrictions on them only to have them not follow through. Regarding the second map, she said she felt it was a starting point but was not sure that she was fully comfortable with it yet. Councilor McLain said that there was time to amend it, however, if there were problems with it. She said she was very comfortable with supporting the item.

Chair Park said he wanted to make clear that nothing had been adopted yet on the larger map, that the committee would need to come back to it. Asked when that vote would occur, he said, hopefully, at this meeting, with the understanding that the committee would have to revisit map N.

Councilor Burkholder asked if Exhibit E would be open to amendment also, saying he was concerned about the southeast Gresham area. As a result of the UGB amendment that would add some industrial land outside the boundary, he said, there was potential to change the designation of some of those areas, so he said he felt that map E should remain amendable as well.

Chair Park agreed and said he thought both would be amended as required, that the attorneys and staff would make certain that they took care of that.

9.  JOBS UGR – Employment Capture Rate, Employment Refill Rate, Market Availability Rate, Tables (reference Ordinance 02-969, Attachment Item 4). Chair Park, speaking to the above-mentioned blue Attachment Item 4, 2002-2022 – Urban Growth Report, An Employment Land Analysis and the Draft 2002-2022 Urban Growth Report: An Employment Land Need Analysis, August 2002 (distributed and included as part of this record), said this was a new document and he anticipated the report would become even more sophisticated as the commercial folks wanted a similar study on their particular issues. He said that the capture rate for the four-county area (including Clark County, Washington) was historically 75%, referring the committee to pages 10-11 of the document. He asked Mr. Cooper if the constraints were the same as for the housing capture rate. Mr. Cooper replied that the constraint was Goal 2, not the statute, and that the record still required evidence supporting the findings for the facts, unlike housing where the statute directed Metro to look at certain data, unless it could be demonstrated that other data was more relevant. This committee was looking at all the data, he said.

Chair Park opened the motion for discussion or amendment, but there were none. He then gave a brief overview of the job capture rate and said that Metro was using the same 20-year historical period as was being used for the residential rate.

– Employment Refill Rate. Chair Park directed the committee’s attention to pages 12-13 of the UGR. Councilor Hosticka said he had read an article in the Business Journal (Portland’s real estate market isn’t turning, by Heidi Stout (a copy of which is attached and made a part of this record) and he said he wondered if it was germane under the heading of refill, or under the heading of forecasted need. He said that people who deal with commercial and industrial land thought that their vacancy rates were higher and that the need was much less than what Metro’s forecast required.

Chair Park said that, in his opinion, he thought it appropriate in the forecast because the issues in front of the committee now affected capacity issues on how they were dealing with that. Asked if refill would be affected by vacancy rate, Mr. Cotugno said that any employment located in vacant buildings was part of refill. Any added employment to existing developed lands was refill, and that could be a variety of different forms of refill, he added. Chair Park said he did not think that it was about demand. Mr. Cotugno said that it was independent of demand. He said that they forecasted for an overall demand based on the overall growth of the economy, and then the demand was stacked up against supply. Councilor Hosticka asked if that point was the appropriate place to discuss this. Mr. Cotugno said that if Councilor Hosticka thought that the refill rate ought to be 60%, for example, based on the supply to fill, then adjusting the refill rate would be the place to do that. Councilor Hosticka asked when the refill rate number for the UGR was generated, and Mr. Cotugno said a year ago. Councilor Hosticka said he felt, then, that the number was probably low. He said that from all the reports he had received, including the article he had submitted for the record, it appeared that the actual vacancy rates were much higher than people a year ago thought they were, and that they had been increasing more rapidly than people had expected. He said he thought they would need a higher refill rate on commercial than was expressed in the report, though he did not know what that number would be.

Chair Park asked Councilor Hosticka what he would base that 20-year higher refill rate upon. Councilor Hosticka said it would be based upon the fact that there were more commercial properties empty right now than were expected. Therefore, there was a larger capacity existing, unused within the UGB, that could absorb some of the demand. He added that he was suggesting since those numbers were generated a year ago, and Metro has a year’s worth of experience, which said that we had higher vacancies, then the number ought to be higher. He said he was not saying how high, but that logic drove it in that direction.

Chair Park asked for a motion on the refill rate.

Councilor Burkholder asked Mr. Cotugno about national trends for the commercial refill, and Mr. Cotugno referred the committee to page 11 of the draft UGR, which had the density assumptions listed. He said that those assumptions were aggressive, that they had received comments from the retail community that these densities were too high. He said that if you assumed a density level more reflective of what was actually happening, then those numbers would go down and acreages would go up. These were included because of the policy direction Metro was pursuing that emphasized regional centers and town centers.

Councilors Bragdon and Hosticka had to go to another meeting, and, after discussion, the committee agreed to revisit any split vote when all committee members could be present. At this time, Councilors Bragdon and Hosticka were excused.

Continuing the discussion, Councilor Atherton asked Mr. Cotugno why more recent data could not be used and was told that it was a year-long process. That time frame accounted for time to do the work, and then more time to review it. He said didn’t see how extra time could be built into the process. The most accurate data staff would have would always be a year old; he added that someone could always produce individual pieces of data that were current. Responding to an inquiry from Councilor Park, Mr. Cotugno said the data being used was from the year 2000. Again, Councilor Atherton questioned the validity of using that date in the forecast. Mr. Cotugno replied that the historical information accounted for a time period, and that during that period rates changed. Rates go higher and lower; they simply fluctuate over time. The data in this report accounted for averages over that period of time. If you forecasted off of peaks, he said, the rates would be high. If you forecasted off of valleys, the rates would be low. The rates staff used had gone through all those peaks and valleys, so they forecasted off the averages.

Councilor McLain said she had no problem with Mr. Cotugno’s description of how staff got to the averages. She then asked the committee to look at page 14 of the draft UGR, under Commercial Refill at the historical average, which was stated as 52 and not 50. She said that the staff had adjusted that number and that was what was bothering her. She said she would support using 52 rather than 50 because that was the historical average, and she said she felt that there was room for discussion on that. She said she thought they all could agree that there would be a one-year lag on the work done, but she said she felt that they should reflect the significant change that occurred in that one year.

Councilor Burkholder said he was trying to determine what relevance current vacancy rates had to what they were talking about, especially in the commercial office markets which was a speculative real estate market with developers looking at doing their own short term trends, and saying they can make money by building lots of offices. Sometimes they’re wrong, he said, and he said that was what the committee was seeing in this instance, not necessarily a drop in total demand over a long period of time, but a miscalculation, especially in the more suburban areas where they rely much more on the office demand of the high tech industry, which had been particularly hard hit. So, there currently was an oversupply of buildings right now, but he didn’t see how that would affect the long-term demand. He said he thought it was cyclical, like the hotel industry and he questioned the relevance of the current market inefficiency to the long-term demand and the estimation of refill rates. He said the committee should not necessarily be swayed by a temporary condition caused by overzealous development, based on other people’s ideas on what the future holds and how they can make money on office buildings.

Chair Park said that it went back to his original question of whether this falls on the supply side or the demand side. He said he thought that refill was on the supply side in terms of how to you would meet the demand. He said his personal opinion was that he thought Councilor Hosticka’s question was appropriate for the jobs forecast, but not necessarily for this piece. That was why he had asked if there was some sort of inter relationship that he wasn’t aware of. Mr. Cotugno said that he was right. Staff had not dampened the forecast of demand based on a limited supply. It was a forecast based upon the characteristics of the economy. The question would be how do they provide that supply, he said, and that is was a supply side question – how much would come through redevelopment versus how much would come through vacant greenfield.

Councilor McLain said that they would be voting on a 50% refill rate. She said that whether they were talking about demand or supply, the historic average was still 52%, and that the committee was being asked to vote on 50%. She said she would want to discard the staff adjustment because they were reflecting a market issue, which was short-term. The market comment that had been made was that there was an extraordinarily high commercial refill rate accomplished by the ability of commercial enterprises to reinvent abandoned inner areas industrial locations and thriving commercial centers. So again, she said, it was a market comment. She said she had been given proof that the historical rate was 52%, and that she was uncomfortable with the 50% rate when the staff’s comment was just a market analysis.

Chair Park asked if she was proposing an amendment. Councilor McLain said she was.

Councilor Atherton said that the history of the 52% was before Metro had the Centers policy, before they had a Regional Transportation Plan (RTP) and a spending plan to focus on Centers. He asked Mr. Cotugno if infill was increased, if the Centers policy was adopted, and if Metro focused more of the transportation improvements in Centers than building more Kruse Ways, if that would increase the number. Mr. Cotugno replied that staff had changed from 52% to 50% based on past history and future forecasts. He said that the 50% refill rate had been derived from the MetroScope scenarios, and he explained them. Any action taken, he said, would be relevant to what outcome they would expect to see. Staff felt they could justify the 50% rate based on the policies currently in place, and he added that if the committee wanted to be more aggressive on policies, then that could support a higher refill rate.

Councilor McLain allowed that staff had leeway to make those adjustments, as they had done, and yet, she said, she couldn’t imagine Metro going below the historic base. She referred again to p. 14 of the Draft UGR Demand Side Refill Estimates paragraph. Councilor Burkholder said that either way they would come in close to the need, and while he agreed they could do a lot better, they don’t have the policy language in place now – he said that would probably come out of the Centers studies.

Chair Park said he thought it important that people were comfortable with the industrial rate and also the industrial relocation rate of the negative -45%, and he asked Mr. Cotugno to speak to the industrial refill rate and relocation rate.

Mr. Cotugno said that the industrial relocation rate was a new factor identified through the development of the UGR and, therefore, was not accounted for in any prior Urban Growth Report. What they found was that there were plenty of situations where a company could not redevelop on-site and they would have to move in order to build a new site. Relocation rate was the rate that measured when that happened. Open space would be left behind, and that space would contribute towards both the commercial and the industrial refill rate. In part, the reason that those two numbers were fairly high was due to spaces becoming vacated.

Chair Park then asked him about the industrial refill rate. Mr. Cotugno said he would have to look into that before he could answer, but he asked the committee to look at page 12, Table 3. Chair Park said that the historical employment refill rate had been 21% according to the report, but that for 2002 it was 35%. He asked if that was out of MetroScope and Mr. Cotugno said that he thought it was, but suggested that he ask Dennis Yee and report back to the committee.

Councilor McLain said that she hadn’t had as much trouble with this scenario because, as Mr. Cotugno had pointed out, this was newer. She said that pages 12 and 13 gave a good basis as to why the number was low. The report gave some reasoning for that and showed the connections between the straight refill and the relocation/open opportunities elements that Chair Park had just asked Mr. Cotugno about. This one made a lot of sense to her, she said.

– Market Availability Rates, Tables. Mr. Cotugno said that staff would have to go back and adjust the tables to account for the 52% amendment. Chair Park agreed, and then asked Mr. Cotugno to walk the committee through the tables.

The committee members turned to the table on page 2 of the blue document titled, Ordinance 02-969, Attachment Item 4, 2002-2022 – Urban Growth Report, An Employment Land Analysis. Chair Park asked Mr. Cotugno if he had factored in the effect of the prior adoption of the Regionally Significant Industrial Lands. Mr. Cotugno said that if Metro adopted Title 4, and assuming that they had a map and some experience about how much use was limited in those territories, all they could do was make an assumption on how much the commercial conversion of industrial lands would take place. He referred to one of the tables in Attachment Item 4, p. 2, and said the first four columns reflected the current UGR and showed the demand for commercial industrial, there was a supply that included refill supply (at 50%, which would now change), and included in that supply was 2800 acres of industrial conversion of commercial purposes. He said that if 2800 was reduced to 1400, then the shortfall of 5700 acres would also be about 1400 less, and the result would be 4300 acres. They had assumed in this table that there was a density advantage of shifting the commercial development from industrial locations to commercial locations. Meaning, they would develop at a higher density in commercial places because the land costs were higher than they would have developed in the industrial places using that 1400 acres of land. So, while the industrial need was reduced by 1400 acres, the commercial need was increased by 900 acres, as shown. That was the density difference between the two. The result was that what had been a 700-acre surplus became a 200-acre deficit. Both of those numbers would change when the rate was shifted to 52%, he said.

Chair Park said under the current scenario, there would still be a shortage of a significant amount of industrial/commercial land, and Mr. Cotugno agreed.

Councilor McLain referred the committee to pages 38 and 39 of the Draft UGR and said there was a discussion on these that she thought should be in the record. Mr. Yee was speaking in the report about industrial land in two different ways on two different sites. The first pertained to the type of industrial land and the second referred to tiers of industrial land as they can be served. The report gave a different narration of each one of those types of land. The reason, she said, she felt comfortable staying with the described chart on the blue sheet was because that discussion actually indicated that the need might be even higher due to the different types of industrial land issues that were out there. She said she thought they were looking at it as a minimum versus taking care of all needs. She said she thought that had been said all along. At this time, Councilor McLain said she didn’t think there was a number that was final or a number that was complete, but the number on the report expressed the only thing that staff could verify. She said she felt that some of those other issues were discussion pieces for periodic task three, for next year.

Councilor Burkholder asked if the table was based on the land need under the Executive Officer’s August 1^st recommendation and did not reflect the additional MPAC recommendations or the executive recommendation on industrial land. Mr. Cotugno said no, the UGR for both housing and jobs was based on the forecasts versus supply in the existing urban growth boundary, in order to get to a shortfall. This did not account for any expansion; this was the existing supply versus the demand. Councilor Burkholder asked if, where the table referred to Land Need August 1^st Recommendation, it was not the recommendation for expansion but the recommendation for the UGR. Mr. Cotugno said that was correct.

Councilor Atherton asked for clarification that this was just the factors and not the population forecast, and Mr. Cotugno told him that was correct.

11.  Residential UGR – Finalize Flagged Items from October 29 Committee Discussion (reference Ordinance 02-969, Appendix Item #3, Residential UGR, Flagged Items (Green Sheet). Chair Park said, referring to the green document, Ordinance No. 02-969, appendix Item #3, Residential UGR, Flagged Items, that the listed, bordered items were questions previously brought up that the committee wanted to revisit.

•  Capture Rate. The Executive Officer recommended 68%, MPAC recommended 68%, but he said MTAC had recommended 69%. For clarification, Chair Park asked Mr. Cotugno if the five-year historical was 69%, while the 20-year historical was the 68%. Mr. Cotugno concurred.

Councilor Monroe said that using a 20-year capture rate when doing a 20-year forecast seemed to make more sense than using a five-year one. Councilor Atherton said that the Columbia County forecast had come up a number of times. He mentioned that there was a large amount of industrial land available in Columbia County, and he asked Mr. Cotugno if he would comment on that. Chair Park explained that they were dealing with the residential forecast and not the jobs forecast. Councilor Atherton responded that the traffic counts on highway 30 coming from Columbia County were significant to the topic. Chair Park said that Columbia County was not within the capture rate being discussed, that it was Clark County that was included. Councilor Atherton said that it had been in the analysis that Clark County had recently decided that they going to, by legislative fiat, declare a 1.5% growth rate.

Chair Park asked Mr. Cotugno to explain the historical rate for Clark County, and how it would affect the capture rate. Councilor Atherton asked him to explain for both Clark County and Columbia County. Mr. Cotugno said that the numbers for Columbia County were very small compared to our numbers. If they were averaged in to the historical information, the change would be insignificant. Clark County on the other hand, would move those percentages a lot. There were 350,000 people in Clark County versus 50,000 people in Columbia County. The historical rate in relationship between the Metro region and Clark County were consistent with the 68% rate. If Clark County was successful in restricting/reducing their growth rate from their historical rate of over 3% down to their desired rate of 1.5% then Metro’s capture rate should be quite a bit higher than the 68% rate. Staff had not recommended making the capture rate higher to account for their compression because they didn’t see evidence that they would succeed in that compression. The rate of growth hadn’t changed in 10 years, he said. There might be some time in the future that their land supply would get more limited, but the evidence so far did not support that effect.

Councilor Atherton asked about Columbia County’s direction and capacity. Mr. Cotugno said that the numbers were very small. Chair Park stressed that the capture rate dealt with the four-county area, and did not include Columbia County. He said to expand the discussion to include Columbia County would take them off the policy discussion. Councilor Atherton said he understood, his point being that they had long discussed the issue – if Metro’s capture rate were lower, then the population would be pushed to outlying areas. There had been recent discussion in Columbia County that they wanted to increase their population.

Chair Park asked Mr. Cooper about Goal 2 coordination. Mr. Cooper said that capture rate is the factor applied to the four-county growth forecast, so the effect of Columbia County or Yamhill County goes to that forecast number, not the capture rate within the four-county forecast. He said that he thought the point that Councilor Atherton was making was germane to the forecast itself, rather than the capture rate within the forecast. Chair Park said this should be discussed when the forecast was discussed, and not while the capture rate was being discussed. Mr. Cooper said yes, and Councilor Atherton agreed. Mr. Cooper said that would be the time to discuss the Goal 2 coordination and consistency factors, but for now the motion in front of the committee dealt with the capture rate within the four-county forecast.

Councilor McLain said it would be nice if the capture rate could just be clean, and that with the Executive Officer and MPAC agreeing on 68% that that looked like a good place to go. She said that, looking at both the modeling and the historic perspective, the capture rate was all the way from 54% - 77%. She made the point that the average seemed to center around 70% when all the factors were taken into account. She referred the committee to a previously distributed October 11, 2002, memo from staff member Lydia Neill (and included in the agenda packet under Agenda Item 10.) where she pointed out (on page 2 of the memo) what happens if they take that number down even a little bit. She said that Metro had an RTP that was trying to include our neighbors outside the boundary. She said that the committee needed to make sure that even if it was 0.5% or 1% or 2%, how much difference that would make in the capacity. Ms. Neill’s memo indicated that 5% could change the capacity by 16,000 to 400 dwelling units, 1% could change it from 3,200 dwelling unit need. She said that was a lot.

Councilor Monroe, referring back to Councilor Atherton’s line of questioning regarding the 68% capture rate and what it meant, said the 68% capture rate meant that 32% of growth in the region went someplace else, and most of that went to Clark County, but some of it also went to the satellite cities in Oregon. Mr. Cooper added that part of that capture rate reflected Banks, Molalla, Canby, Sandy, etc., within the four counties outside the Metro jurisdictional boundary. Councilor Monroe clarified that it would not include Newburg or Scappoose, and Mr. Cooper agreed.

Councilor McLain said that the 69% was what the performance shown over the past five years, and as a courtesy to the outlying jurisdictions, e.g., Banks, Gaston, North Plains, Canby, Sandy, Molalla and others, and so as not to strain our regional transportation system and jobs, we should consider at least 69%.

Chair Monroe asked if the effect of going from 68% to 69% would be beneficial to Clark County was were trying to keep to 1.5 % growth. Chair Park said he thought that was correct, and Mr. Cotugno agreed.

Chair Park asked Mr. Cotugno if there wasn’t an imbalance in the 32% population/growth going elsewhere and the 25% of jobs moving out, and if those numbers didn’t need to be closer. Mr. Cotugno said if you didn’t want to create the imbalance and limit the supply of residential land, thereby forcing the residential farther out, but not limit supply of employment land, thereby accommodating it inside the region, you will further that imbalance. Residential development patterns tend to be more flexible than employment development patterns. Residential development patterns tend to be more flexible, and do choose to make that commute trip and have the flexibility to locate farther away. This does have transportation implications, however, when that happens, he said. Employment tends to want to locate closer to other employment, and therefore less likely to move farther out. They would compete for the limited local supply. By restricting the supply of employment land, there was less of a tendency to chase it to an adjacent community. If you limit residential it would get pushed somewhere else more readily, than employment.

Councilor Burkholder said that people make decisions on where they live non-economically, based more on lifestyle. He said that it was a more flexible, non-economic, emotional decision, than where to work. He said he thought it would be difficult to tweak that, as people will make subjective choices.

Councilor McLain said she put the amendment forward that out of respect for the RTP, for neighbors and neighboring communities, and for Metro’s Centers policy.

•  Residential Vacancy Rate. This item was held over for full committee participation.

•  Acres for New Schools. Chair Park said that the Executive Officer had originally recommended 700 acres for school sites while MPAC recommended 900 acres. Subsequently, the Executive Officer amended his recommendation to correspond to the 900 acres.

Councilor Monroe said that the region would continue to grow and would need room for schools, and more land would be brought into the UGB and that needed to include schools. He said that he did not know what the right number would be, but he accepted MPAC’s and the Executive Officer’s recommendation.

Chair Park asked why Metro wasn’t aspiring for more in this area. He gave an example of Gresham High School deciding to use artificial grass instead of natural, which allowed them to use their football field more, i.e., more with less.

Councilor Burkholder said if it wasn’t 200 acres, then he would feel compelled to examine it more closely. He said he was willing to go along with the Executive Officer’s recommendation. He said that he felt it went over the edge a little, but ultimately it was a minor issue.

Councilor Monroe said that there was an increasing movement among school districts, and cities and counties for multiple recreational uses of school properties, community school programs, shared park/school properties, etc. He said he’d been a part of the movement that has questioned the need for 10, 20 and 50 acres for elementary, middle, and high schools. He also questioned why high school students needed to drive to school every day, instead of taking the school bus. He said he was hopeful that school districts and officials were listening, and that they would make good decisions about appropriate uses of land, not only for school needs but also community and park needs.

Councilor McLain said she would go along with this item also. She commented that they could help schools with their land use decisions. She said it bothered her that there were examples of schools that did not want to share their facilities. If it dealt with safety issues, then she thought that was reasonable. The other part, dealing with ownership and the cost of taking care of facilities, should be shared also. She thought that anyone who used the school grounds should help pay for the maintenance of it. She said that she didn’t think 900 acres was out of line.

Chair Park agreed that the schools could do better, but that he would support the 900 acres.

•  Underbuild. This item was held over for full committee participation.

•  Residential Refill. This item was held over for full committee participation.

Chair Park called a recess at 1:36 p.m.

The committee reconvened at 3:59 p.m. Councilors Bragdon and Hosticka were present.

At Chair Park’s request, the committee reviewed the Periodic Review Calendar table of November 7, 2002 (distributed by Mr. Morrissey distributed and made a part of this record). Chair Park recapped what had been agreed to and what had yet to be done. (need to get this & mark it as attachment #13.) He said the committee acknowledged that the staff work was done on the Alternatives Analysis and that it would be included in the final adoption of Ordinance No. 02-969, that no committee action was necessary at this time.

The committee then returned to the Flagged Items (green sheet), beginning with revisiting the Capture Rate, discussed earlier.

•  Capture Rate. Chair Park recapped the motions and votes that had taken place,

Councilor McLain recapped her reasoning for Councilors Bragdon and Hosticka, saying that after looking at the staff report and the modeling, as well as the historic perspective, she could see that this was very sensitive to outside influence. Councilor Monroe said he supported the 69% capture rate because if more of the growth was accepted in the Metro area, it would help Clark County, who was trying to find a way to limit their growth to 1.5%. He said it would also give additional incentive for getting more growth into the Centers areas, and that if that was successful, they should be able to achieve a capture rate of 69%, or maybe even 70%. He felt 69% was a good number, not too aggressive, but defensible. He said he hoped committee would support the 69% rate.

Councilor Hosticka asked Mr. Cotugno about the impact to the forecasted need for housing within the metropolitan area of changing the rate from 68% to 69%. Mr. Cotugno said the housing unit need number would be increased by 3,200. Councilor Hosticka commented that a number of metropolitan areas throughout the world have made conscious policy decisions to go to a satellite city approach and he felt the committee should also have that discussion because complete communities linked to the metropolitan region by high-capacity transportation was preferable to unending amoeboid growth spreading along the landscape. He said he would vote against the motion. Councilor Burkholder said he would also vote against the motion. He said 68% was equally defensible and was added to in terms of its value because it was based a 20-year history and they were looking at the long-term effect. The 69% was based on the last five years, and therefore Councilor Burkholder said he agreed with MPAC’s reasoning that the longer-term number was the more accurate number to use.

Councilor Monroe said the only problem with that argument was that the 20-year history included a time when Clark County had no land use planning. Leaders in Clark County today, he added, were trying to be more constructive about planning and controlling growth in their region and it would make their lives more difficult if Metro forced more growth across the river. Satellite cities in Europe have high-speed rail systems connecting to the urban core so people can get to and from their jobs without driving and he said it would be many years before we have such a system, and trying to impose a satellite city approach to this region would mean vehicle miles traveled would increase, as would air pollution.

In response to a question from Chair Park if both the 68% and 69% capture rate were both defensible and the history required, Mr. Benner responded that starting with a five or seven-year look-back to Periodic Review, but with economic trends and cycles, such as the capture rate, the statute wants you to go back further if you believe that would give more reliable, accurate and complete information.

Councilor McLain said 3,200 units might seem a small issue to some, but the RTP was built on the 2040 Growth Concept which included a 70% capture rate at the time, and got really good results. Her point, she said, was that even with a ramp-up on some of our strategies, even with a ramp-up on some of the counties and cities coming into compliance with the Functional Plan, a 69% rate was achieved. She disagreed that going back farther would get better information as they did not have a Centers strategy then, or an acknowledged Regional Transportation Plan. She felt the difference on this sensitive issue of capture rate was the information that they know about Vancouver and what they are capable of achieving in the last five years with those regulations that weren’t in place for the other 15 years. She hoped the committee would consider that the green sheet text said the last 5-year performance point was at the 69% rate, and as Mr. Benner had pointed out, they were both defensible.

Chair Park said he was concerned that the capture rate on the job side is 75% and information from staff was that it was not likely to decrease. He said he wondered about housing and Councilor McLain’s point about satellite cities’ potential. Also, he said, in looking at the other cities, the Portland metropolitan region is better equipped to handle that particular growth because of higher planned densities and Centers strategies, etc. On the other hand, he said he hoped other issues would be examined as to pros and cons. He said he would vote for the 69% rate.

Councilor Bragdon said he was torn as well, as there is good evidence on both sides, and it was a bit of a struggle between being aspirational and predictive, and which were all linked to other transportation decisions. He said they were making policy, but also trying to make the best observations they could. He said overall, he tended to give a certain degree of deference to the Executive Officer and to MPAC for the amount of staff time and effort that they had put into these. He said he would go with the 68%, but either way it turned out, it certainly pointed to some good discussion that won’t end with this vote, including the satellite cities and transportation discussions.

Councilor Hosticka said, in looking over the past history of this issue, this was the first time he thought he had seen a vacancy rate, which he didn’t think was required. He said if the justification for having a vacancy rate was to say there was a frictional rate of people moving in and out of the region, permitting regional change, he said he thought that was similar to the discussion about the market factor when this committee had discussed industrial lands, in that the 20-year land supply itself provides opportunities for people to move into and out of the region and have locational change. He did not see the need to include a vacancy rate, which was why he moved to delete it from the UGR altogether. Councilor McLain said she would vote in favor of this motion, though if there were other choices, she might pick a different one. Councilor Burkholder said he was in favor of the motion, that it would be either 5% or zero. His question was whether it was used or not. The data showed that there was a 5% vacancy rate, and he said he wondered it that were important. At any one time, there is a minimum of 15 years’ excess capacity within the UGB, and that was a cushion. If the goal is to provide a cushion, it was already there. He said he hadn’t heard any argument that stated any other reason for it, and that the state law already accounted for it. If you have a rate, then a precedent it established whether it makes sense in the future or not. Councilor Park asked if the last UGR, 1997-2017, did include a vacancy rate, making this a change from that policy. Mr. Cotugno said that was correct, that it was inclusive in the numbers, but not called out as an independent item.

Councilor Monroe asked about the discussion by the Executive Officer and MPAC that led them to recommend a 5% vacancy rate. Mr. Cotugno said he did not recall an MPAC discussion, but said the discussion with the Executive Officer and MTAC, he thought, had had discussion about what was being built over a 20-year period, and what having a state law requiring a 20-year land supply meant. They discussed whether it was the number of households moving to the region or houses that were going to be built during a 20-year period. He said they had recommended the vacancy rate be included because that was how many houses get built in a 20-year period. Councilor Park asked him if affordability issues had been discussed. Mr. Cotugno said the relationship between a vacancy rate and the marketplace does have an affect on affordability. A very high vacancy rate forces the market down and discounts prices as a result, and tight vacancy rates force the price up because there is more of a monopoly situation. He said the issue still remained, do you have to add in the vacancy rate or does the extra 15-year extra supply constitute your vacancy rate. Which gives the vacancy rate you’ll actually need.

Councilor Bragdon said he did not think affordability was relevant. He asked if the 5% excess supply was measured over a 20-year period, or if there was a 5% vacancy at any given time over the 20-year period. Mr. Cotugno said the staff calculation incorporated a 5% vacancy rate at any given point in time. Councilor Bragdon asked why the choice was between zero and 5%. Mr. Benner said his understanding from the UGR was that there was data in the record showing that the residential vacancy rate at any point in time in this region was about 5%, so if that was the reason for choosing to have a vacancy rate, then there needed to be something in the record to justify that. He added that in an early exchange between Metro and the Department of Land Conservation and Development (DLCD), the answer came back that it was often about 2.5%, but that was apparently based upon the experience of other communities. Since there was experience here, he said, it would seem that that would be what they would want to choose, if they chose one at all.

Councilor Atherton commented that it had been his experience, based on his years in real estate development, that most often the pro forma was 5% in investment strategies, which had nothing to do with land use planning, but with the market. He said he did not find anything in the statute requiring a vacancy factor and thought they would be better served by being clear and not factoring in a vacancy rate. Councilor McLain said she had tried, but couldn’t find more than two sentences in the UGR on p. 6 on vacancy rates. She couldn’t find anything else to support it except that at some given time, there was a 5% vacancy rate that they acknowledged, historically, and they had talked about it being a market factor. She did not feel the vacancy rate was needed legally, and said she would support the motion.

Mr. Cotugno said he would provide another copy of the data. He thought this was more about what to include, and not what the numbers were, but the numbers were in the record that show a vacancy rate over time from two different sources – PGE and the census. The PGE data covers about a four-year period and the census covers a 30-year period. Both are broken down between multi-family and single-family. He noted fairly low vacancy rates for single-family, as low as 2.9%, and as high as 4/4%. The multi-family was at a much higher vacancy rate, ranging from 7.4% to as high as 11/6%. He said the 5% they recommended was based on a blended rate of 4.3% to 6.3%. He said he felt that was a debatable range.

Councilor Bragdon said idea of one in 20 empty dwelling units seemed high. He noted that apartments were cyclical by nature and wondered when the vacancy rate would get so high that it would start being abandonment and dilapidation. Five percent seemed to be inching toward that which would not be something the region would aspire to. Councilor Monroe said a 5% vacancy rate in apartments was pretty good and getting to 0% was impossible because constant turnover. He said the finance companies usually used a 10% vacancy rate to figure out how much money they will loan. There is and always will be a certain number of housing units vacant. He said if they went to zero, he felt they would be factoring in a false number and would be under-performing in terms of implementation of state law. He said they needed to find the most reasonable, rational vacancy number they could agree on to do their job as state law intended. He felt an appropriate vacancy rate, whatever that would be, needed to be included.

Chair Park asked if the MetroScope runs were with or without the 5% rate; Mr. Cotugno said he would get that information.

Councilor Hosticka said they were not building houses or apartment buildings, they were allocating land for a forecast need for residential housing. He said they could choose to allow extra land for a frictional rate of they could choose to say that the 15 years of land that was always in the boundary but not being currently used was enough of a buffer to allow for that frictional rate. He said he was not saying he moved the vacancy rate be 0%, he was moving that they not have a vacancy rate and this council judge that accomplishing the goal of allowing friction ion the marketplace that accounts for people to move in and out is accomplished by having a 15-year land supply. He said he was not arguing numbers, but the concept at this point.

In response to a request for explanation from Chair Park, Mr. Benner said he thought the committee had some flexibility in defining the need. He said the two choices in front of them were translating the population forecast into a number of dwelling units for the need, or doing that plus provide for a vacancy factor because the market seemed to want more product out there than was actually occupied at any point in time. He said the committee had a choice and he would expect that the Land Conservation and Development Commission (LCDC) would uphold their choice. Councilor McLain said she was going to go for the 15 years of friction being enough to take care of the supply and the need they were assessing.

Chair Park said on a policy side, he understood what was being said. On the real market side, there was always a vacancy rate. Mr. Cotugno said there was lots of data, they didn’t need more. It was simply a choice the committee had to make.

Councilor Monroe said several members of the Metro Council did not particularly like the 20-year land law but it was the law and they were supposed to apply that law. He noted that only once, back in 1970, was the vacancy rate slightly below 5%, and the rest of the time it has been above that. He said the truth of the matter was that if they deleted the vacancy factor entirely and applied everything else, they were not meeting the 20-year supply, they were only meeting a 19-year supply, so they would not following state law. He said he would not support the motion.

•  Acres for New Parks. Chair Park reviewed the Executive Officer’s recommendation of 1,000 acres for parks and MPAC’s 2,300-acre recommendation based on the belief that there is ability to create parks beyond just system development charges (SDCs) as the identified mechanism, and Mr. Burton’s revised recommendation of 2,300 acres.

Councilor Burkholder said the 2,300-acre number should be aspirational and was also backed up with code language already passed by the committee, setting a level of service standards over the next couple of years. He noted that Chair Park was interested more than just the acreage but also in the location of the acreage so the citizens are best served with those parks. He said he thought another Metro opens spaces bond measure could look at helping fund park land, and that this was a fairly modest increase in the number of acres they hoped to have in parkland in the next 20 years and this would set up the mechanisms to do it. He commented that Lake Oswego recently passed a bond measure, and Gresham had passed one as well, and that there are other resources for parklands than SDCs. He thought this was a reasonable approach and a reasonable recommendation.

Councilor McLain commented that speaking against the 2,300 acres was difficult because it sounded like she was speaking against parks, which she was not. She said they were being asked if they truly believed there were 2,300 acres that would go to parks and noted it would probably cost close to half a billion dollars to buy those acres, which couldn’t be covered by the SDCs currently on the books. She said even if there was a second bond measure, which she supported, the first one was only $135 million and it took seven years. She said she was comfortable that the SDCs would get them to the 1,100 acres.

Councilor Atherton said there were also other factors such as age structure of the population who use different types of parks. He did not think an acreage value gave the quality calculation that people were looking for in communities, specifically linear parks and trails. He noted that trails get more use but have less acreage than other parks uses. He said there was a clear movement in Oregon and other places throughout the United States for having new growth pay its own way. He said right now, SDCs to cover the costs of parks were on average 25 to 35%. He said the natural wisdom of that system would work its way out if they allowed it to. He said he felt it would be better to err on the smaller acreage and UGB movement so this dynamic would work from community to community in the region.

Councilor Bragdon commented that, as Councilor Hosticka had said, this vote would not build a single apartment or create a single acre of parks. His concern, he said, was whether this aspiration was tied to any sort of assurance that it was going to happen. He noted that some jurisdictions were very eager for UGB expansions, but didn’t have SDCs and didn’t purchase parks, so there were some ironies in this. He said he would love to see these acres preserved as parks and didn’t want a vote on this to be perceived as a vote against parks, but felt it needed to be realistic or tied to some assurance that it was actually going to happen, either through functional planning or some fiscal program. He did not see any assurance that this would not be the worst of both worlds; that UGB decisions were made based upon it, but then the assumption would not be fulfilled.

Chair Park asked what type of assurance could be built in. Councilor McLain responded that it was a Functional Plan piece, but that MPAC was not ready to help with that amendment yet. That was why she thought the acreage in this motion was too high. She said they could condition planning for parks, but not how many parks or how much parkland had to be in a community because that was not in the Functional Plan. She reiterated they had no guarantee until the Functional Plan was changed. Chair Park noted there were other things that had no guarantee as well. He felt creating parks where there was density was key. Councilor Monroe said everyone agreed that parks were important to livability. He felt including some land in their calculations for parks would make a statement that they value parks and that they were urging local governments to make sure there were neighborhood parks included. He said he would support the motion.

Councilor Hosticka agreed that they were not building parks, but were trying to look into the future to see how many acres inside the existing UGB were likely to be allocated for parks. He said he could not support the motion as they had no data on that, and usually if there wasn’t data, there was policy, which they didn’t have, either, as Councilor McLain pointed out. Councilor Bragdon added that they were not only not building parks, they were not even saying how many acres of parks should be built. They were only trying to predict how many would be built. Chair Park said he would support the motion.

Councilor Hosticka felt this was the number that had the most data behind it and he found most defensible.

Councilor Hosticka said he made the motion for purposes of discussion only and had no basis for any underbuild number.

Councilor Burkholder said there were a number of indications that they were exceeding the minimum requirement in the Framework Plan for minimum density build out, but as they had discussed, they did not have the data in a form that they could defend. He noted they had required reporting on this issue so they could better understand. He said he would oppose the motion and felt they should rely on the 20% as a minimum density as required.

Councilor McLain was confident they could defend 20% because they had an 80% regulation. She asked legal staff what kind of data the state would recognize if we knew we had up to 88% with the regulations in place. Mr. Cooper said if they had reports from all the jurisdictions within the Metro boundary in a uniform way about what their rebuild rate was, and it showed greater than 80%, that data could be relied on. He said anecdotal evidence from some jurisdictions and areas achieving greater than 80% was problematic because it was not regionwide and did not show what was actually being achieved throughout the region.

Councilor Hosticka then asked for clarification of the City of Portland’s testimony on the underbuild rate, whether it was anecdotal or solid evidence. Upon advice from legal counsel that the record was closed as of November 1, 2002, and that it was not advisable at this time to take testimony, it was decided to return to this matter at a later time. Councilor Hosticka asked Mr. Cotugno if he considered the report given by Mr. Gil Kelley, Portland Planning Director, on October 30, 2002, as anecdotal or solid evidence. Mr. Cotugno asked if he could come back with that information after the committee discussed the refill rate.

Chair Park said told the committee two of their members would be missing at the next scheduled meeting, on November 19^th, and he was considering canceling that meeting because of the importance of this issue. After discussion, Chair Park polled the committee, and they agreed to reconvene the next day, November 8, 2002, at 8:30 a.m. Because it would be a continuation of this meeting and they would be in recess until then, Mr. Cooper said there was no need for further public notification.

Chair Park then asked if the committee wished to continue this portion of the meeting. They agreed to continue, addressing the Residential Refill rate. Chair Park briefly reviewed the residential refill suggested rate of 28.5%, the historical residential refill rate of 26.3%, and the Executive Officer and MPAC's recommendation of 28.5%. He said this was both refill and development.

Councilor Atherton said he thought they could do better than 28.5% and that there was significant evidence in the record already that they could. He referred to Ms. Neill’s October 28th memo in the agenda packet and the localized refill rates from MetroScope case studies on Table 2, p. 5. He pointed out the trends for movement towards Centers and using land more efficiently, the aging population, and Measure 26-29, protecting existing neighborhoods, and moving towards renovation and revitalization of urban cores. He said this was a clear direction and that by holding tight and increasing the residential refill rate, they would follow in line with their data and the trends, and with the council’s aspiration that even higher numbers than 28.5% were appropriate.

Councilor Hosticka asked if the case studies in MetroScope provided evidence they could use when making their decisions about the numbers. Mr. Cooper responded that the statute required using data to predict the need, then once the need was determined, they could do either, or a combination of adding land to the UGB or taking measures to increase the efficiency of land inside the boundary. He said the statute does not give a lot of guidance about what kind of data to use to justify predicting what your measures will do, so the question was whether there was evidence and a rational basis to explain in the record why they thought the measures they were taking would improve the rate above the historical trend. He added that the MetroScope model made assumptions about what happens over a relatively long period of time, taking continued actions every five years to follow through, and showed what happened at the end of that period. He said that was not the same kind of action that the statutes call for in terms of taking measures now to increase the efficiency of land. Councilor Hosticka asked if some of the actions they were taking in other aspects of this decision, including changes to the Framework and Functional Plans, in conformity with the same assumptions that they used when they ran the Damascus one. Mr. Cooper said they were consistent with the first step of the MetroScope run, but there was no way to show that you were in fact going to, five years from now, etc., continue to do what the MetroScope model was based upon so there was problem. The other thing to remember, Mr. Cooper said, was that the statute did not allow you to take into account aspirational impacts of how you move the boundary today. That was not necessarily a measure to improve the efficiency of land use inside the boundary, he concluded.

Councilor McLain said she thought Metro’s Centers policy would. Mr. Cooper said the Centers policy, including all of the incentives plus the transportation investment, was the justification for this bump up from the historical rate to the 28.5%. Councilor McLain asked if Mr. Cotugno felt the 28.5% was conservative or aspirational. Mr. Cotugno said he thought the 28.5% on centers policy was somewhat conservative, that it was only 2%, but it was 2% because there was no guarantee, it was only encouragement and incentives. Chair Park cautioned against being too aspirational and said he hoped to keep a positive trend line.

Councilor Atherton asked if Councilor Monroe, as maker of the motion, would consider a friendly amendment of 35% rate. Councilor Monroe said he would not. Councilor McLain said she felt they were giving a signal that they truly believe in the Centers policy by voting for the Centers strategy the way they did, and she thought the rate could be moved up to 29%.

Councilor Hosticka said he thought almost any number was fraught with danger, that in looking at MetroScope runs that showed anywhere from 32% to 50%, a base case being 26%, cause him to think anywhere from 26% to 50% was probably within the realm of a reasonable forecast. Chair Park disagreed based on the information in MetroScope because he said there were a lot of incentives based on that assuming every area was an urban renewal district, which was not practical. Councilor Hosticka said, 26% to 32%, then, was reasonable. Councilor Monroe agreed that 28.5% was conservative and was the most defensible number. He said they had already eliminated the vacancy rate so they had to think about the interplay of all the things they were doing. He felt they should stick with the 28.5% number.

Councilor McLain said 29% was as defensible as the more conservative 28.5%, but a little more aspirational and showed faith in the Centers policy, and she urged a yes vote.

Councilor Burkholder disagreed with Councilor Monroe that they should be making their decisions based on the end number. He said the decisions should be made based on what was the right policy and, as best they could, ignore what they added up to, because the goal was the right policy which would affect future decisions. He looked at what the right thing to do was and what was most defensible. Councilor Atherton said he preferred a minimum of 30%. He thought that was also defensible as the record held good information about accessory dwelling units.

At 5:28 p.m. Chair Park recessed the meeting until 8:30 a.m. Friday, November 8, 2002. Mr. Cooper commented that the reason for the recess was for staff to bring additional information to the committee in a timely manner so they could continue making their decisions as laid out on the agenda.

The committee reconvened on Friday, November 8, 2002, at 8:54 a.m. Chair Park said staff had been asked to gather more information on the underbuild, as there were questions about the data collection. Mr. Cotugno spoke to the packet of material, Chapter 5, Residential Supply Analysis, a memo to him from Brenda Bernards of his staff on Reported Under-build Factor 1990 to 1995, and a copy of the Portland Compliance Report of February 1999 (distributed and included as a part of this record).

Mr. Cotugno explained how his staff applies the underbuild in their calculations, saying each location where there is vacant land is identified (that is the overall vacant land inventory). He explained the zoning categories (and the fact that there are 746 different zoning categories throughout all the local jurisdictions) which all get boiled down to the categories listed, and those rates represented the average. These rates represented the maximum allowed zoning in these designated locations, and the 20% underbuild was a discount from this level. Mr. Cotugno then spoke to the memo from Brenda Bernards on the underbuild factor.

Councilor McLain said that Mr. Benner often talked about the importance of using the best information possible, and that if the best information was not used, there needed to an explanation of why. She asked how Metro could justify using this average when detailed reports were available from some jurisdictions. Mr. Cotugno said he would not use the specific information provided by a jurisdiction because the overall average for the region accounted for the fact that some jurisdictions would be higher or lower than that rate. Using the specific reports would mean cherry picking the high ones without averaging in the lower ones. There was more discussion on this topic, and Mr. Cotugno said he had spoken with Mr. Al Burns of the City of Portland the previous evening after this committee recessed, and in their conversation they concluded that this analysis was based upon the zoning for the City of Portland. Metro’s UGR was based upon the comprehensive plan for the City of Portland. The comprehensive plan has higher densities in a variety of places. The UGR assumes that the City of Portland will permit development at those higher densities, and that developers will build to the higher densities. Metro has given the City of Portland’s plan the benefit of the doubt that the city will move up to the comprehensive plan level. Therefore, Mr. Cotugno said, staff applied a 20% underbuild rate to the city’s comprehensive plan. If the same density shown in the city’s calculations was applied to its comprehensive plan, the city’s underbuild rate would be higher. If anything, 20% was too low an underbuild rate for the City of Portland, not too high, relative to the densities included in the UGR itself.

Councilor Burkholder said one of the issues raised by Councilor McLain was that if information is good, it should be used. However, Ms. Bernards’ cover memo essentially explained that Metro did not have the information. The information that existed was old, sketchy, incomplete, and inconsistent.

Chair Park said there was a plan in the proposed Functional Plan language to address that particular issue, and he asked Mr. Cotugno to review the plan. Mr. Cotugno said there were a variety of places in the Functional Plan amendments before the committee, which called for better underbuild reporting information. The goal was to coordinate the reporting specifications among jurisdictions, so Metro receives consistent data, and with LCDC, so that Metro’s requirements match LCDC’s requirements. The expectation was that the data would get better, but that it had been incomplete and inconsistent in the past.

Councilor McLain said she thought it was a good idea for the committee to review the underbuild number, and said she was still concerned that they not give up information that they had, if they were assured that the information was good. In the example of Portland, from the staff material distributed today, she agreed with Councilor Burkholder that there were still questions to be answered about the consistency, specific reporting, and them using averages for some categories. She still felt that, historically speaking, Metro knew that the region’s underbuild was less than 20%. However, at this time the council did not have any information that provided enough certainty. Therefore, the 20% underbuild assumption was the safest number, because Metro had an 80% density requirement. She said was learning toward the motion on the table at this time.

Councilor Bragdon said he supported the motion for similar reasons. For all the factors, there was no right answer. There was the best information available at any given time, and that information improved as time went on. Looking at the Portland material and the range from different jurisdictions, he said he was curious about the role of the marketplace and asked if anyone knew what people in the building industry said about the underbuild, as opposed to the jurisdictions.

Mr. Cotugno said he has not talked with people in the building industry. However, Dennis Yee, Chief Economist, has said that the marketplace does have an impact, as does a decision on the urban growth boundary. If there is high demand and low supply, land is used more efficiently. Therefore, the region should be trending toward less underbuild. On the other hand, mitigating against that is that the most efficient development can be obtained from property that is the easiest to develop: flat, square, no drainages, no steep slopes or flag lots, etc. As the region’s supply inside the boundary decreases and the market pressure goes up, the supply consists of the hardest-to-develop property. Therefore, there was a very high mix of land that will inherently have a higher underbuild rate, due to its physical characteristics.

Chair Park asked that, at a future time, staff explain the accounting method for determining the less-than-underbuild that actually occurred, which increased the region’s capacity.

12.  REGIONAL POPULATION FORECAST – NEED (Reference Ordinance No. 02-969, Appendix Item #2). Chair Park referred the committee to the tan document, a memo to Andy Cotugno from Dennis Yee regarding Forecast Comparison (mentioned earlier and included as part of this record).

The committee waited while Mr. Cotugno went to ask Mike Burton, Executive Officer, to join this discussion.

11.  RESIDENTIAL UGR – FLAGGED ITEMS FROM OCTOBER 29 COMMITTEE DISCUSSION (revisited).

•  Accessory Dwelling Units (ADUs). Councilor McLain said Accessory Dwelling Units (ADUs) had not been discussed and requested a moment to address the issue. Chair Park agreed. Councilor McLain said ADUs were considered in the last report, and this time they were blended into some other figures. She said she did not feel that the blending in had happened at the right level. She said staff had said that the very best information they had at that point was the work used during the last Urban Growth Report. She asked about the status of the work and said she wanted to discuss it. Chair Park apologized that this wasn’t on the master list of flagged items, and he asked Mr. Cotugno to bring back the information on ADUs for discussion later in this meeting.

12.  REGIONAL POPULATION FORECAST – NEED (continued). Chair Park told Mr. Burton of the motion on the floor to accept his forecast recommendation.

Councilor Atherton spoke to his paper in support of a lower population forecast (undated), and a memo from Mr. Yee to Michael Morrissey, Senior Council Analyst, dated October 25, 2002 (both distributed and included in this record). He said the first memo demonstrated considerable doubt about the forecast that the population would increase 1.76% per annum over the next 20 years. He said he thought they had good information that would support a lower forecast rate, and he pointed out that significant harm could take place with a higher forecast rate where significantly less harm could occur with a lower forecast rate. He said the first thing he looked at was the relationship between employment growth and population growth. The 1997 Urban Growth Report showed the experience in the 1990s, in which the region had 2.3% population growth and 3.8% employment growth. If this relationship changed over time, it was important to know why, he said. In his memo, he mathematically calculated a population growth of 1.15%. That was significantly different from the past figure. There was nothing in the information provided by Mr. Yee that clearly showed the relationship between population and employment growth, and why this would be changed. He could not see any consistency test in the model. Incidentally, the most recent DRI/WEFA forecast for the Portland metropolitan area, using the most recent data, showed a 1.1% per annum population growth. This report was received in September, he said. Another concern about the forecast was that he had asked Mr. Yee if he had backcast this forecast, i.e., had he looked at previous 20-year periods to see if the model would have forecast those outcomes. Councilor Atherton said he looked at the 20-year period between 1970 and 1990. In that period, the growth rate was 1.6% per annum. But in the overlapping 20-year period between 1980 and 2000, he said, the growth rate was 1%, and there were 23,000 fewer persons than in the previous 20-year period. Would the model have predicted those numbers, he asked. No one knew. This was a way to test the validity of the model.

Another issue raised was that the assumptions in all of the reports from DRI listed a number of uncertainties, such as U.S. monetary fiscal assumptions, war with Iraq, no U.S. budget deficit, stable energy prices, and economic recovery during summer 2002. Had any of these assumptions changed, he asked. There was no indication that those had been factored into the report.

Lastly, Councilor Atherton said, on March 12, Mr. Yee brought up the significant impact of illegal immigration into the state and the Portland metropolitan area. The committee may want to ask itself if it wanted to move the UGB for 35,000 people who do not follow the law, in effect sanctifying that process. The most recent report from the state Office of Economic Analysis showed a number of different forecasts, ranging from the forecast of the economy.com (-.8 for 2002 and 2.5 for 2003) to DRI/WEFA (-1.2 in 2002 to 1.2 for 2003). While there was a range of numbers, they were all below Mr. Yee’s forecast. Yesterday, Councilor Atherton said, he called Tom Potiowsky of the state Office of Economic Analysis and asked him about the relationship between employment growth and population growth. Mr. Potiowsky told him he thought this was very interesting, but suggested that Councilor Atherton talk to the state demographer, who said he was almost ready to publish a study on the tri-county metropolitan area, using standard demographic technique and the 2000 census number, backcasting to look at the experience of the last 20 to 30 years and the most recent changes in population. He said the number would be between 1.2 and 1.3%. Councilor Atherton said it behooved the committee to listen to this information and factor it in. He said thought 1.6% was way too high.

Chair Park asked Mike Burton, Executive Officer, to explain his 1.6% population forecast recommendation.

Executive Officer Burton said Metro was required to determine a population forecast based on the metropolitan area, including Clark County. Most growth would occur in the metropolitan area, but some would not. The factors staff analyzed ranged from birth and death rates to assumed economic factors. This forecast was not calculated on the back of a card. The Planning Department had been working on this forecast with a lot more data than had been available in the past, he said. The issue of illegal immigration was a factor far beyond his ability to address. The Metro Council could make a policy decision to exclude that portion of the population, thereby decreasing the percentage numbers. The next step would be to figure out some way to make that actually happen.

This data had been presented to the committee at several meetings over a lengthy period of time, Mr. Burton said. In terms of the difference between Metro’s forecast and the forecast used by the Port of Portland, people from the Port had testified and submitted a letter indicating that Metro should not use the Port’s forecast because it was inadequate for Metro’s purposes. If Councilor Atherton’s fear was that the forecast number was too high and would cause an adverse effect, Mr. Burton said Councilor Atherton needed to understand what that adverse effect would be. His recommendation was based on the best technical data Metro had, and Metro had people who focused exclusively on this work. The forecast was based on a number of factors, which were explained in both a previous memo and in the forecast itself (appendix 5, page 5) (a copy of the forecast is included as part of this record). Appendix 5 compared all of those factors over a period of time in previous forecasts, and did the overlay comparisons. The forecast before the committee was highly defensible, in his opinion. There was a range in the different forecasts done by different agencies, but they used different factors. Metro was using the factors incumbent upon itself, Mr. Burton concluded, which were far more detailed than any of the other studies, and included Clark County.

Councilor Bragdon said these were obviously very complicated documents in terms of the technical data, and he asked Mr. Burton to refresh the committee’s memory on the peer review process that the forecast underwent.

Mr. Burton said the forecast was peer reviewed by respected economists in the region. He listed the members of the review panel, listed in Appendix C of the forecast.

Councilor McLain said everyone on the committee believed that staff’s work was thorough, integrated and rigorous. Mr. Yee and the review panel were war veterans in economics and had truly done a great job. However, to Mr. Burton’s question about the risk of a high forecast, Mr. Yee laid out in book two of his report, pages 35 to 37, the risk of a deeper and longer recession to the regional forecast. The committee needed to give an honest review of the risk of forecasting high or low. At least three of the risk factors listed had already happened, and she listed two: the economy has not revived as quickly and there have been more layoffs in the high-tech area. The committee’s questions were not the result of not trusting the forecaster. Rather, she trusted the forecast and the author in looking at the downside if his predicted factors did not occur. It was important to keep in mind the peer review panel’s task. While it was a legitimate panel, there were a lot of different people on the panel for a lot of different reasons. She said this was a very important and valid conversation. The committee was actually supporting Mr. Yee’s work by reviewing both his positive and negative scenarios.

Councilor Atherton read out loud the final paragraph of Mr. Yee’s forecast report, “In closing, the IDV appears to be a useful explanatory variable. Integration of an input/output table produces significant parameter estimates and also provides reasonable and statistically good fitting modeling equations overall. Sensitivity tests of the multiplier impacts that are incomplete and not reported in this paper also reveal reasonable results.” In other words, he said, the very sensitivity tests, such as the high/low and the statistical probability of an outcome, had not been done and had never been reported. The council had requested a range and had never received one. They had always received just one number.

Chair Park asked if Mr. Burton or Mr. Yee wanted to respond. Mr. Burton said Councilor Atherton was stating his opinion, and he would not argue with anyone’s opinion.

Councilor Hosticka distributed a comparison he ran between the forecasts in the record, entitled Forecast Comparisons for the Portland Metro Region, Carl Hosticka, November 2002 (distributed and made a part of this record). He said there were a number of experts looking at these issues and they reached different conclusions. He explained the table in the document he had distributed. Each of the forecasts had different time periods and different bases. He tried to look, within those forecasts, at what data they actually had and what kind of conclusions could be drawn. The second box down was Mr. Yee’s report in September 2000. For each of the five-year increments between 2000 and 2022, Councilor Hosticka said he tried to calculate what the growth rate for those five years.

The main point was that this forecast said that a large proportion of the growth would occur in the first five years, and then in the second five-year periods. That was the data for which other people had supplied forecasts. DRI/WEFA supplied a forecast in September 2002 in which they looked at the growth rate for that period also. The state Office of Economic Analysis gave an all-state forecast and, admittedly, he said, the Portland metropolitan region had a different growth rate than the all-state. But if you looked at both of those forecasts for the immediate period for which they are forecasting, they showed substantially lower growth rates.

Councilor Hosticka said he believed that if Metro’s forecast, the median forecast, was heavily loaded in the front years, that they were probably overestimating the growth as it extended out into the future. This was important because one way of backcasting was to look at the results that you got from your previous forecasts. He directed the committee’s attention to Mr. Yee’s October 22nd memo to Mr. Cotugno (tan paper), mentioned above. The data supplied by Mr. Yee was a comparison of the forecast he made when the 2017 study was done, with the actual history for those periods in which history existed. In the first period, the forecast was higher than history by 889 people. In the second period, the forecast was lower than history by 848. In the third period the forecast was higher than history by 4,000; in the next period it was higher by 6,000 then 13,000.

The important point, Councilor Hosticka said, was that each of these numbers, except for one, was higher, and got progressively higher as they moved further out into the future. The Port of Portland did say that their forecasting methods were different from Metro’s methods. The Executive Director of the Port submitted a letter to Metro that tried to account for those differences, he said (a copy of the letter is included as a part of this record in a packet of material dated October 31, 2002, with a cover letter to Councilor Rod Park from Mike Burton, which includes a copy of the DRI-WEFA and Oregon Office of Economic Analysis forecasts; a copy of a memo from Dennis Yee to Andy Cotugno providing an explanation and comparison of these forecasts to the recommended Metro forecasts; a copy of a letter from Bill Wyatt, Port of Portland Director, providing further explanation of the DRI-WEFA they used for their commodity flow study; and a copy of a document produced by Mr. Yee providing further documentation of input assumptions used for the Metro recommended forecast.) The Port memo’s bottom line was that after the Port made its adjustments, its forecast would predict an average annual growth rate for the next 20 years of 1.5%. In his opinion, Councilor said, the committee had conflicting evidence, and that evidence was in the record.

Councilor Hosticka added that he thought the rate of 1.5% may still be high, based upon information from other sources, but at least it was based on the kind of analysis that was done by other people.

Chair Park asked Councilor Hosticka if he had something for Clark County. Councilor Hosticka said he did not have Clark County because he did not have that data, but he tried to account for that by making some assumptions that Clark County would have to have populations that were much higher than their actual population. In one case, he said, the county would have to have a population of over 500,000; in 2022 the difference increases to over 700,000.

Mr. Burton asked Mr. Yee to comment on some of the technical comments that were raised.

Mr. Yee said with regard to statements made by Councilor Hosticka regarding the history listed in Figure 9 of his memo to Mr. Cotugno (p. 10), said perhaps he wasn’t clear in the table. In fact, Mr. Yee said, that history has been revised. The table included old history that Portland State University and the Census Bureau used prior to the 2000 census. As noted in statements made into the record prior to this meeting and perhaps during this meeting, the Census Bureau did an actual enumeration and discovered that nationwide, millions of people went uncounted during the 1991-1999 period. So the history here, in fact, was raised upwards and made the forecast for 2017 look even more accurate because that model used the economic flow information, which was more accurate than a purely population driven forecast. Mr. Yee said he did not want to change the history that was previously published. However, if he had the opportunity to change the history, it would show that the 2017 forecast actually underforecast the level of population that actually exists, as counted by the U.S. Census Bureau for year 2000. He respectfully contradicted Councilor Hosticka’s statement about the forecast being overforecasting when, in fact, the 2017 forecast underforecast the reality.

Councilor Burkholder said he had moved to accept the recommended forecast because he knew that any forecast would be wrong. Forecasts were never exactly right one way or the other, but they did not know which way it would be wrong. He felt confident in the work of Metro’s staff. The revised history showed that the methodology used was about as good as could be expected. He could not make a professional judgment that there was a change in one direction or the other, he said, and the committee needed to make its decision based on good information, and they could not make a different decision unless they had some reason to say that the information they had was unreliable. On the contrary, they had a lot of information stating that Mr. Yee’s information was reliable. Yes, there were a lot of other opinions as well, but it was the committee’s responsibility to accept the information provided by their economist, which had been peer reviewed.

Councilor Atherton said, on the question of peer review, he had talked to Professor Barry Edmondston at Portland State University. Dr. Edmondston was not able to attend the most recent report, but he commented to Councilor Atherton that his concern about the model was that there were no negative feedback loops, and no limits, i.e., when did the model go to zero growth. That was not clearly evident from the materials provided, Councilor Atherton said. He then asked Mr. Yee to explain the difference between the population and employment growth in the 1990s versus the future predicted growth, and why it was different in the future. Mr. Yee showed very high population growth relative to employment growth, as opposed to the past ten years.

Executive Officer Burton asked Mr. Yee to address Councilor Atherton’s question, and pointed out that had Dr. Edmondston missed the meeting, perhaps he should have attended and he might have received an answer to his question.

Mr. Yee attempted to paraphrase and answer Councilor Atherton’s questions. First, were there any feedbacks within the regional economic model, with respect to population. The answer was yes. Dr. Edmondston has attended past forecast meetings; this was not the only peer-reviewed forecast Mr. Yee had done on behalf of the Metro Council. Dr. Edmondston was very familiar with the economic model and in particular, the population components that drive the population forecast. Mr. Yee said he was, in fact, in contact with Dr. Edmondston routinely. They sometimes worked on joint projects, and they did talk about the model and the forecast. He said did not want to put words in Dr. Edmondston’s mouth, but he suspected that Dr. Edmondston found the work credible, reasonable, and within the bounds of professional accuracy or precision. Mr. Yee said yes, there was a feedback through the housing price effect, as he’d mentioned to this committee before. He explained further. As housing prices ratchet up faster, that has a negative effect on migration, thereby reducing the population forecast. He gets the price forecast for housing from MetroScope and that data is integrated. Now Metro has a fully integrated economic, land use and transportation model that accounts for those feedbacks.

Mr. Yee said the second question was about the differential, or the ratio, between the employment growth rate and the population growth rate. In terms of sociological phenomena, since the 1960s there has been an enormous increase in the number of women entering the labor force, essentially doubling the labor force and making labor much cheaper. In the supply and demand framework, whenever the market is flooded with surplus supply (in this case, women entering the labor force), it will bolster employment growth. But the population did not change. That is why, through the last 25 to 30 years Councilor Atherton examined, he found employment growth in the range of four%, and population growth in the range of two% for this region. Mr. Yee continued, saying Councilor Atherton’s memo accurately stated that this region historically has grown twice as fast as the nation as a whole, in terms of population, and that was a correct statement. That growth was stimulated by the region’s relatively stronger economic growth path and the desirability of this region. In the future, the differential between employment and population necessarily must narrow because the proportion of women projected to enter the labor force is not likely to increase much more. In other words, it has topped out. The region is not going to get that flood of cheap labor that will make employers want to hire more employees. He reminded the committee that wage and salary employment was not just one employee. There was a component in which there was multiple job holdings taking place, which will tend to boost the rate of employment growth somewhat faster than the labor force. There was a differential, but for the reasons cited, it would narrow.

Councilor Atherton thanked Mr. Yee for his cogent answer to some of the changes in the ratio. Going back to the overall issue of the economic forecast, he referred to page 9 of Mr. Yee’s memo, where it stated that, “A modest rebound (an average of 1.8% through 2010) is predicted in the short-run to play-out the current business cycle . . .” and Councilor Atherton said he assumed that referred to 1.8% in population growth and this went to the question raised by Councilor Hosticka about the front-loading of the high numbers in Mr. Yee’s population forecast. He asked if this business cycle had not played out faster than expected. Mr. Potiowsky had told him the big engine has been high tech through the 1990s, and clearly that engine is substantially reduced. There will be some population growth, but nowhere near like it was in the 1990s. Councilor Atherton asked if Mr. Yee thought that those changed conditions over the last two years should be reflected in the forecast, in terms of the business cycle.

Mr. Yee said Councilor Atherton was absolutely correct, the economic engine was sputtering, but the region was not out of it yet. He reviewed the region’s population history from the 1900s to today. In his opinion, that was a significant proportion of data to review. He has looked at business cycles for the region and the nation over those 100 years. The region was currently in a recession, and there have been other recessions nationwide over the last 100 years. After every recession, the nation has rebounded. When he looks at the downturns, they are negative. When he looks at the subsequent years – the second, third and fourth years – that was what he meant by “playing out the business cycle.” The region was in a recession for about a year, and the second, third and fourth years were playing out that recession cycle. It does grow faster, and there was a rebound. During a rebound, the growth rate was faster than an average trend. After every recession in the past 100 years, during the second through fourth years, average population growth has always exceeded over 2%. In some years, it has topped out over 3%. When he states in his forecast, “playing out the current business cycle,” he was saying that during years 2003, 2004, and 2005, the region would see population growth bump up, faster than 1.4%. He said he felt that 1.4% was this region’s steady state of population growth. But because the region was in a recession, he had built in what he thought accurately reflected how the region will respond during a recovery period.

Mr. Burton said, looking at page 9 of the memo, that there was an illustration of the cycle described by Mr. Yee. Looking at that chart, the forecast shows that the 1.4% population growth will occur from 2010 and later. In his opinion, he said, Mr. Yee’s forecast was cautious.

Councilor Monroe asked if the Port of Portland’s population forecast of 1.5% included Clark County.

Mr. Yee said yes, the Port’s study was for a six-county PMSA forecast. Columbia and Yamhill counties both pulled down the population forecast number on a relative average basis. The Port’s forecast did not include the latest census information.

Councilor Monroe said, in comparing Metro growth statistics to statewide growth statistics, the Metro region has historically grown faster than Oregon as a state. He asked if he was correct that the rural parts of the state have actually been declining in population for many years. Mr. Yee said yes, that was correct.

Councilor Monroe said therefore, they needed to be very careful about comparing Metro’s numbers to state numbers. With respect to Councilor Atherton’s questioning about the ratio between jobs growth and population growth, wasn’t it true that in the next twenty years most of the baby boomers will be retiring, and thus a huge chunk of the population will actually be taken out of the work force, he asked. It struck him, he said, that this fact might account for part of the reason for the changes in the ratio. He said next year, Metro will hopefully be completing its work on Goal 5, and he asked Mr. Cotugno if it was likely that the effect of the Goal 5 work would increase or decrease the amount of buildable land within the UGB. Mr. Cotugno answered that if the council adopts further Goal 5 regulations limiting development, then the buildable lands supply will be reduced.

Councilor Monroe noted that Metro’s attorneys would have to defend whatever number the council adopted. He asked Mr. Cooper if he saw any difference in his ability to accurately defend 1.5% or 1.6% population growth. Mr. Cooper said counsel was comfortable with the defense of the 1.6% population growth forecast. Councilor Hosticka had laid out some reasons why he thought 1.5% was justifiable. If the council chose to use 1.5%, counsel’s job would be to go back through the record and make sure they can find sufficient findings for the council to adopt.

Councilor Hosticka said, to clarify on the Port issue raised by Councilor Monroe, the DRI/WEFA report was actually 1.3% for the six-county area. The study adjustment to 1.5% took into account the factors Councilor Monroe mentioned. When the Port staff made the adjustments Councilor Monroe asked for, they came to 1.5%.

Chair Park asked if what Councilor Hosticka was saying was the two forecasts were comparable, with the adjustments that Councilor Hosticka noted. Councilor Hosticka said his assertion was that according to the Port staff in their memo, they adjusted their forecast to make it as comparable as they thought possible. Their bottom line was 1.5%. If there were more details about how those adjustments were made, the committee would have to go back to the Port’s memo and have them come and discuss it.

Mr. Burton asked Mr. Yee to answer Chair Park’s question. He noted that on page 2 of Mr. Yee’s October 22^nd memo, it stated that, “With input from DRI/WEFA, they note that due to the differences in geography , , ,”and “The remaining difference between the forecasts . . . may be attributed to the degree of attention that Metro is able to focus on more accurately modeling the nuances of the Portland metropolitan economy. . . .” That was where the difference was, he said. They do their work, and this is where we do our work.

Mr. Yee directed the committee’s attention to page 3 of 3 of Appendix B of the October 31^st memo, which was a reproduction of the Port of Portland letter from Bill Wyatt, Executive Director. He underscored Executive Officer Burton’s comment about the nuances. Metro staff spent a lot of time on the regional forecast for the metro area, as compared to DRI-WEFA. Metro staff peer reviewed it, he said, and they ran through a series of quality checks. DRI-WEFA has a small staff that studies about 300 metropolitan areas very rapidly. Care had been taken to produce the Metro Council regional forecast. When the Port goes through its analysis and takes the 1.3%, and makes its adjustments to 1.5%, it is still an adjustment based on the prior employment forecast. Mr. Yee said that in his earlier comments, Councilor Atherton had noted that the population forecast and the employment forecast and the rest of the economic forecast were interrelated. Mr. Yee said that in a previous discussion with the committee, he had pointed out that the population forecast of 1.3% delivered by DRI-WEFA came with a very low employment forecast of .5%. To him, that forecast seemed really pessimistic, not cautious.

Executive Officer Burton said the summary statement on page 3 of 3 in Appendix B of the memo probably answered the original question.

Councilor Bragdon commented that one of the differences that he understood between these two studies was not the geographic scope or even the timing, but the purpose. The difference in purpose was addressed in the appendix to Mr. Wyatt’s letter, in which he talked about why the Port undertook its study. The purpose of the study was to estimate the commodities flowing through the region. Therefore, the study relied on certain factors that were more international, related to the sale of wheat from North Dakota in Japan, which has no effect on the region’s population, but has a great effect on the Port. In Mr. Wyatt’s appendix, he noted that population was a factor, but he said (on p. 2 of 3, Appendix B), “Forecasting the volume and type of commodities moving through a metropolitan area is a very different analysis.” And “The purpose of using the DRI-WEFA model was not to develop a pinpoint accurate local population forecast. In fact, international, national, and state economic trends have a greater influence on the types and volumes of commodities moving in our region than local economic trends.” Councilor Bragdon then asked Mr. Yee to comment on the different purposes between the two studies and how that might affect the committee’s use of the forecast for its own purpose.

Mr. Yee agreed that the purposes of the two forecasts were different. The purpose of the Port of Portland’s forecast was to develop the best commodity flow freight model forecast for the region. What drives that forecast is not population or the employment forecast. In fact, he said, they did not really look at using any of the numbers for this region that were before the committee. They were looking at the potential output of the nation, of international economy, and how its growth either dragged or stimulated freight movement through the Port system. It was the international forecast from DRI-WEFA and the national forecast of GDP that then drives the output model. In other words, what is the total tonnage of this or that product, and the dollar value of those products. Those were the actual inputs into the commodity flow model, not employment or population. The employment and population figures were ancillary. They were useful figures to describe to the lay person what the forecast is telling you. The layperson doesn’t care that the productivity growth rate for food processing is 2.9%; he or she is more interested in the general, overall gross national product (GDP). While the top-level numbers were helpful for explaining the study’s results to laypeople, economists do not use those top-level numbers because they were far too aggregate to tell you any correlation between the industry you’re trying to forecast, such as food processing or high tech, versus GDP. In fact, it is actually the presumed productivity growth rates that drive the employment for any of the industries. It is the wage rate evaluations that we presume, and it is the exchange rate and interest rate assumptions for a specific sector that drives, not GDP; it’s an aggregate statistic that is not very useful in forecasting small-area detail.

Councilor McLain said she thought this information was valuable, and distributed an excerpt from the report, “2015 Regional Forecast and Urban Development Patterns,” published in February 1996. Mr. Yee helped work on the report, she said, and it was important for two reasons. First, she directed the committee’s attention to the footnote on page 10 that stated that the use of the alternative economic scenarios was common practice when dealing with future uncertainty. It is a means of helping to define the range of possible growth alternatives that could materialize in this region given various assumptions. She mentioned this because she said a lot of people questioned the need to go through this in so much detail. They did so because it was a forecast, and as much as she believed that they had refined it since 1996, to give even better and more specific information, it was still a forecast. About a month ago, the committee asked why it could not have a reasonable high, medium and low forecast. She directed the committee’s attention again to page 12, and said she used the figure when talking to people in the region about the good work done by Mr. Yee. Mr. Yee has been able to add many things to this graphic to make Metro’s work even better. But because she supports Mr. Yee’s work and the work he has done over many years, she said she thinks it is important to remember that it is forecasting, these are assumptions. Any time you change a single assumption, you make a variation that can make a big difference on the actuals that come in. She said she felt much more comfortable last time with the report because there was a low, medium and high reasonable range. One of the important pieces of the conversation was the committee knows it needs a single number to put into the formula to get the forecast information they need for the need assessment in the UGR. But to get to that number, they needed more than just econometric review and economists’ review and peer review of people who work in this area. They also need the common sense test.

The common sense test is that Mr. Yee, as much as they give him credit for being able to see behind him and forward and all around, did not have the luxury of knowing what we know about the economy right now. They have one year of information that Mr. Yee did not have a chance to use. The assumptions in his own report (pages 36-39) indicate that there would be no U.S. budget deficit. They know that will not happen. Mr. Yee’s report also assumes stable energy prices. They know that was already in question. Her only concern was that using Mr. Yee’s own good work from the early 1990s through this forecast, still gives the Metro Council the responsibility of reviewing that report and making a conscious effort to figure out what they know now that Mr. Yee did not have the luxury of knowing, that would actually give the council an opportunity to determine whether the forecast was a high, moderate, or low number. In her estimation, she said, even though they were not given the range, they still needed to look at the forecast as if it was a range. Because Mr. Yee did not provide a range, she had to go through the process of deciding whether it was a high, a medium or a low number. This report talked about the number as if it was a range and as if there were assumptions that would have to be made if this number is to be correct, looking at the risk scenarios listed by Mr. Yee in his report on pages 36 through 39 of book 2. It was the committee’s responsibility to take the technical document and see if it is a high, medium or low impression. It was her estimation, she said, after reading Mr. Yee’s work, that the forecast was high, and the committee should consider the motion before it as realistic.

Councilor Hosticka asked whether, if the motion to close the debate succeeded if the maker of the original motion to amend would have an opportunity to close on his motion.

Councilor Hosticka said as the committee prepared to vote on his motion to amend the main motion, he wanted to discuss the context of the vote. He said he thought the committee had a number of forecasts produced by reliable and thoughtful people about the future. He said he didn’t think the committee’s task was to choose whether the forecasts were right or wrong, because in the end, they were not making judgments about forecasts, but about the future. They know that there was doubt about the future, he added. Even Metro staff gave the committee a range of possible futures, some more probably than others. Therefore, the question was what judgments were the committee going to make about the future, and how would they make those judgments.

His first point, Councilor Hosticka said, was that, once they took this vote, it was no longer Mr. Yee’s forecast, WEFA’s forecast, or the Port of Portland’s forecast. It became the Metro Council’s forecast. In casting this vote, they were making a judgment about the future and taking ownership of whatever number they adopt. He said Councilor McLain did a good job explaining that the region is in a period of uncertainty, that we have more information now than when the forecast was submitted by staff a year ago. The information about the history of the last year would suggest that other judgments were possible about what the future was likely to be. Therefore, he said he did not see this as choosing between two people. He did not want his vote to be interpreted as a statement that he relied more on one person than another. He wanted his vote to say that this was the judgment he was willing to make about the future, and he was willing to say that it was the kind of future he thought was likely. Based upon all of that, he thought the record did say that there was reason for them to be uncertain about the future, that there was conflicting evidence from the experts about the future, and from his point of view, he said it was more prudent and that he was willing to take the responsibility to say that he believed the future was likely to be one in which we see an average annual growth rate of 1.5%. He said he wanted his motion to be taken in that spirit, not that he was casting doubt on anyone’s competence or ability, but that when he made his judgments he had to make a determination and take ownership, and this was what he was willing to take ownership for.

Councilor Monroe, seconded by Councilor Bragdon, called the question on the main motion.

Chair Park commented that the committee had engaged in a good, healthy debate over the number, whether it was 1.5% or 1.6%. He said he thought there were pros and cons to looking at this, and there were risks of being too high or too low. There was no question that the forecast would be off because no one could accurately predict the future. The committee had to make choices, and in five years when the Metro Council looked at the number again, they would know how accurate the forecast was.

12a.  ACCESSORY DWELLING UNITS (ADUs) (continued). Chair Park then asked if staff was able to gather information about ADUs during the previous debate.

Councilor McLain said her question was not to have staff repeat what they said the last two times. Instead, she wanted the committee to consider the testimony in the record, the committee discussion, and other information indicating that staff made another discretionary change in the formula. Staff decided, on their own, to not put ADUs in the UGR, she said, and she asked that the committee at least not go further back than they did last time. They had an ADU account in which they used the best possible information that they had, and she said she was only asking that they use that same, good piece of information and not put less in this UGR than they did last time. There were more ADUs on the ground, and just because staff has not been able to collect it did not mean the committee should not use the information. If staff can’t get comfortable with the collection they have, then she recommended going back to the best information available and call it out.

Councilor Hosticka clarified that if the motion passed, the committee would be adding a new line to the UGR, under the category Capacity within Dwelling Unit Capacity within the Current Local Zoning, and adding the number 7,500. Councilor Bragdon asked if the ADU number was incorporated elsewhere in the report. Chair Park asked Mr. Cotugno to give a quick synopsis of why the ADU count was not included in the UGR.

Mr. Cotugno said the inclusion of the 7,500 figure in the last UGR was based upon national information, not local information, and that a reasonable rate to assume would be 1.8%. He said staff did not recommend including 1.8% this time because the data from local governments, to the extent it was available, indicated fairly low numbers. Generally the information is not available, he added. The committee heard testimony from some of the local jurisdictions reporting that, to the extent they’ve been able to identify them, they are very low numbers. Consequently, staff didn’t think that more recent data supported the rate at which the national article that was used last time suggested you could reasonably see.

Chair Park asked Mr. Cotugno to be more specific as to which jurisdiction and how many, if he recalled. Mr. Al Burns, Planning Bureau, City of Portland, told Mr. Cotugno (from the audience) that in Portland the number was 50 a year for two years. Mr. Cotugno said if that number was multiplied by 20 years, it would be about 7,500 for the City of Portland. Councilor McLain added that was only for the City of Portland.

Mr. Cooper said when the Metro adopted the previous UGR with those numbers in it, they were dealing with a different text of the statute than exists now, because the statute was amended in 2001 by the legislature to make more specificity about the quality of the data we have to have in the record if we’re not using local data. And that statutory language, he thought, gives Metro great difficulty if we’re going to rely on the previous survey from national data that was used the last time to justify the 7,500 unit number. We do not have the required clearly describing the geographic area timeframe to support the American Housing Survey data that was utilized in the previous Urban Growth Report to justify the 7,500 units.

Councilor McLain, in response to that, said first of all that we are using other national data, and, in fact, we’re using averages many times because the staff is uncomfortable using specific data that we have. And so this time they’re going the other way. We have specific data, for 20 years in Portland only, of 1,000. We have 23 other jurisdictions out there, and even if we use their minimal numbers, we’d come up to more than zero. And so we do have specific data that we could support this with, and Mr. Cotugno just gave you the Portland number. She said she wanted to follow the new 2001 rule, but she said she would indicate that if that is the case, that she thinks the standard has to be on all of the work, not just part of it, because the staff is using national data and they’re using averages – they’re making their own TAZs (Transportation Analysis Zone) (NOTE: Councilor McLain more than likely meant SRZs, i.e., Standard Regional Zones), and deciding out of the 756 different zoning codes which of those go into any of the 26 TAZs (sic) they personally meet up. So it’s got to be constant, she said. What she asked for them to do was use a very best possible number.

Councilor McLain explained that she was amending her motion to follow legal staff’s direction on what her motion should be to be appropriate for the 2001 data responsibility, and that she wanted the ADU number added to the report that pulls out the numbers that we can verify, and extrapolate that over 20 years because that’s what we’ve done for everything else.

Mr. Cotugno said, in further response to Councilor Bragdon, what was reflected in this Urban Growth Report as noted on the Urban Growth Report form, staff had suggested the committee take into account the ADU rate as part of the refill rate. To the extent the committee has made a judgment about what the level of refill should be, that included the refill rate. If the committee wanted to include a separate line for an ADU rate, then it should get backed out of the refill rate.

Councilor Monroe said, to Mr. Cooper, that he’d heard the motion, and the revised motion, and asked if there was any such number he could come up with that he could justify. Mr. Cooper said he hadn’t reviewed the record, and he did not know. He said he thought, from what Mr. Cotugno had just said, that he may have a place to go in the record that he would then say was the number that was in the refill rate. He said he hasn’t had a chance to discuss that with Mr. Cotugno in more detail, but the point was that the previous evidence Metro used was no longer within the description of what the statute requires. Councilor McLain’s motion, if there is evidence, staff can go out and find it. It may produce a number. He said he didn’t know how that would then relate to what Mr. Cotugno has just said about the refill rate.

Councilor Monroe said, with reference to the refill rate, what Mr. Cotugno was saying was that the 28.5% took into consideration ADUs, and that number the committee raised to 29% by action yesterday. It seemed, he said, that the committee had more than covered this problem.

Councilor Burkholder said, reviewing the memo they’d received from MPAC and MTAC, that this was called out as an issue where Metro needed to improve and standardize reporting so they can be estimated reliably and consistently across all jurisdictions. He said he was trying to remember whether this was something the committee had already talked about as a new reporting requirement, or if it was something they needed to be adding as a reporting requirement.

Mr. Cotugno said it was actually an old reporting requirement, and the data we’ve gotten has not been adequate. So the recommendation from MTAC to improve and standardize reporting is something we already have direction to do, Councilor Burkholder asked, and that Metro would do it. Mr. Cotugno said that was a work program direction. The code establishing the requirement was already there. What we’ve been getting as a result of that, he said, has not been very good. Councilor Burkholder said what it comes down to is that the committee needed to make the decision based on the best available data, and if we don’t have good, available data, he said he couldn’t support making a change in the UGR based on not having good data.

Councilor Bragdon said it sounded like this has been taken into account this year, but four years ago it was drawn out as a line item and this year it’s being handled as refill. Four years ago ADUs were not part of refill, he said, and asked Mr. Cotugno to confirm this. Mr. Cotugno said Councilor Bragdon was correct. Councilor Bragdon said on the basis of the information we have, he was comfortable that the committee was handling it in the appropriate way for the information they have, so he said he was not supportive of this particular amendment.

Councilor Atherton, to Mr. Cooper, said in many of the other aspects of this UGR, the committee had been looking at capacities. Yet, here, when they consider ADUs they’re talking about past performance or using national data, trying to factor in this very loose number. He asked if there was any requirement to do that or could the committee be allowed to make an estimate of capacity and ask local jurisdictions what their best judgment would be. If the committee were looking at a future of higher housing costs, if they’re looking at a future of changed demographics, people getting older, more mother-in-law/granny flats, and so forth, he asked, was it possible to use capacity.

Mr. Cooper said, if he understood the question, capacity as used in the UGR was the vacant land inventory, the partially vacant land inventory, the estimate of how many houses can be built in mixed-use areas, and the refill rate. That’s total capacity. The statute requires Metro to use past data and then, if we find other national trends or data from a wider geographic area, if we can be specific about it and can identify what the area is and what the basis for that estimate is that’s varying the past data, or if we’ve used a longer time period than the five years to reach our judgment about what’s going to happen, as you did on the capture rate being based on 20 years of data rather than on 5 years of data which was the minimum the statute calls for, you’re allowed to do that. You’ve asked a hypothetical of what’s possible. What’s possible is going to depend on what the data is that the local governments actually supply you, and he said he didn’t know what specific things that might be in the record now that they would use to come up with a different rate, that they hadn’t had a chance to discuss that. The record is voluminous already and there may be something there that would make other things possible. It’s hard to be hypothetical and theoretical without looking at the facts, he concluded.

Councilor Monroe called for the previous question. Chair Park said, if there was no objection, he would allow Councilor McLain a closing statement before he called the vote.

There being no objection, Councilor McLain said, to the fact that the refill rate covers the ADUs, again, she said she had seen no evidence in the record that that was true. She said she would question that and she said she thought you would have a hard case in trying to find that there were ADUs in there that were counted. Secondly, she pointed out that the committee does have information, staff has provided it to the committee, and she also gets the same subscription to the New Urban News. Fairview Village in Fairview, Oregon, 50 units, or 18% of all the single-family homes, had ADUs. And Orenco Station in Hillsboro, 15%, or 27 ADUs were built in that project alone. We know they’re there, she said, we have evidence that they’re there. We can go to the permitting process, eventually, and get it in a way that the staff will then accept it. The fact is that we do have data, she said. She said she would like to again remind the committee that her motion was not for the blanket ADU number of 7,500, it was for specifically what out of that record they can pull from the evidence that’s been presented by our local jurisdictions and others of us on the committee who have talked about this at at least five meetings.

Chair Park, for clarification, asked if she meant within the context of what Metro’s attorneys thought was defensible. Councilor Monroe told Chair Park he was out of order, that the vote had been called.

Councilor Hosticka asked Chair Park to restate the motion. Chair Park said the motion was to use the information that can be gleaned from the record and insert it within the UGR, as a separate line. Councilor McLain said that was correct.

Councilor Hosticka, to the motion, said he thought the committee had gone through this is a lot of detail. It was getting late and he said he thought this was time to pause, assess where they were, and move on. They’d had a thorough discussion of all the issues involved, so he thought it was time to take the next step.

Councilor Bragdon said he agreed and said that regardless of the level of detail they’d gone into, there’s always a little bit more than can be used. Certainly the discussion over the last two days was really healthy and very positive, he said. There were some questions he said he still had with regard to the parks and the MPAC report, which he looked at again this morning. His discomfort yesterday on that, he said, was the sense of it being too aspirational. His need, he said, was for some sense that there was some seriousness on the part of the Metro Council and the local jurisdictions. He said he would also like to be able to use the intervening time to have the staff at least brief him a little bit more on the options. It’s not that he didn’t want there to be 2,300 acres of parks, and he said he thought the committee all said that in casting their vote, but he said he’d also like to see a little bit more about what the options were if there were a way to make that happen.

Councilor Monroe said regarding the parks decision, the split decision the previous day, and the decision on vacancy rate, that when the new staff information was reported, the committee may want to revisit those. He said he hoped they would, and having the additional staff data and in terms of what the impact of those preliminary decisions were, would be helpful and they could revisit those questions and any others when they get that information.

Councilor Burkholder said he’d read through the MPAC information and had talked to some members of MPAC since the previous day. It turns out, he said, that the vacancy rate had never been raised as an issue for MTAC or MPAC discussion. There was a scheduled MPAC meeting next week (November 13) and he said he would like to recommend to the MPAC representatives on the council that they ask MPAC to discuss this. It was a major issue, he said he thought, in that do we use it or not, what’s the right number, etc., and again, he said, that was why he voted that he thought we shouldn’t use it because we didn’t have any kind of backing saying it’s a valid approach. But then it turns out that the people who we ask for advice have never discussed this issue. He said he was kind of surprised and it was too bad that they didn’t do that, but we do have an opportunity to hear from them, he said he hoped, between now and then, and so he said he looked forward to hearing from them about that as well.

Chair Park said he was looking for some technical information. What on this, he asked, on the UGR that could be run ahead of time would be useful to the committee. Councilor Hosticka said as had been indicated, some of the numbers recycle each other. Referring to Table 1 (in the agenda packet), he pointed out that line 21, the refill rate, cycles off a decision that was made earlier, the additional policy actions on the additional refill on line 26. What he suggested was that the committee have the chance to look at all the reverberations through this report, see where they are, and then move on to looking at those areas they want to add to the boundary, since they still have a positive need number as projected, even in the roughest calculations of the UGR.

Chair Park asked Councilor Hosticka if he would be willing to withdraw his motion and just ask that the staff go off to do their work, to not accept the UGR at this point. Councilor Hosticka said no, that the committee needed to make a statement, they needed some punctuation here, they’ve debated now for seven or eight hours over this, and needed to say they’ve done a piece of work. He said he wanted to move on to the next piece of work. Chair Park said his concern was that he would get a potentially negative vote because of asking us to accept the UGR with the current numbers vs. the request that was made to have some numbers reexamined.

Councilor Monroe on a parliamentary inquiry said he was concerned that if we vote in the affirmative on Councilor Hosticka’s motion, after we gather additional data, will there be another opportunity to amend the UGR. If not, he said he would be a no vote. Councilor McLain said of course it can be amended at any time, and to reconsider it takes a simple majority.

Councilor Monroe said then the next time they met, after Councilor Burkholder spoke with MPAC next week and so on and others, and the committee receives their input, then a motion would be in order to amend the UGR even if the committee passed it today, he asked. Councilor McLain said yes. Councilor Monroe said he was asking the chair.

Chair Park said he was trying to determine if, in order to ask for reconsideration, someone who was uncomfortable with one or two of the numbers would have to vote in the affirmative in order to ask for reconsideration at the next go around. He said he was not sure that that was a fair position to put some in. Councilor Monroe said he didn’t think that was true if the committee approved the UGR today, but he said he thought any motion to amend it in the future would be in order by any councilor, and he asked Mr. Cooper if that was correct.

Mr. Cooper said the main motion in front of them was to refer the ordinance to the council. That main motion was subject to any further amendments that the chair allows. If the chair wanted to rule a motion out of order and the body didn’t overrule his ruling, then that’s how you determine what’s in order for future motions.

Chair Park asked Mr. Cooper for clarification. Mr. Cooper said Chair Park was asking his lawyer, not his parliamentarian. The lawyer knows that the parliamentary steps that go forward to your final action are not going to be subject to review on appeal, so there aren’t a lot of court cases to describe all of this, for your lawyer to advise you. His understanding of Robert’s Rules of Order, he said, was that while a motion to reconsider a specific motion is subject to the rule that it has to be moved, the reconsideration is moved by someone who voted in the majority. A separate motion to amend the main motion, as long as it’s not repetitive and identical to a previously failed motion, is always in order.

Councilor Monroe said, as the parliamentarian, that he concurred that if the committee approved Councilor Hosticka’s motion today and adopted the UGR, then they wouldn’t have to go through the process of reconsideration of any of the sub-motions that were made that got the committee to that point, but that any councilor would be able to propose an amendment to the UGR prior to the Metro Council adopting the full ordinance.

Councilor Hosticka said he thought they were getting excessively wrapped up in parliamentary detail, and that his purpose in making the motion was that he was hoping to get a unanimous yes vote to say, yes, we have done something as a group, that we feel we want to go from this step to the next step, and that was the spirit in which he made his motion, to try to say collectively, although each of us differs with individual pieces of what we’ve done, that in the spirit of unity we would say that we all support our collective action.

Chair Park said his consideration was making sure that the committee was covering its bases and not putting someone in a potentially untenable position. Councilor Monroe called for the question, and asked for a second. There was no second.

Councilor Bragdon said he was with Councilor Monroe in that he would be a no vote if it meant that if MPAC gets a little teeth about the parks or that the committee won’t have a chance to raise that again next week, but it sounded from the discussion just now that that was not the case.

Councilor Bragdon said the past two days produced very good policy discussion. It was not easy, but it was great to be with public servants who really wanted to debate issues. He added that Metro staff does very good work.

There being no further business before the committee, the meeting adjourned at 10:55 a.m.

Respectfully submitted,

Rooney Barker

Council Assistant

ATTACHMENTS TO THE PUBLIC RECORD FOR THE MEETING OF NOVEMBER 7, 2002

The following have been included as part of the official public record:

Attachments to the Public Record for the meeting of November 7, 2002 (continued)

TESTIMONY CARDS. None.